Oaktree Rides in as White Knight For Diamond Foods

Diamond Foods is getting a lift from a $225 million investment from private-equity shop Oaktree Capital, which should offer some financial stability to the walnut company as it tries to fix up shop after accounting improprieties emerged last year that nixed a deal to buy Pringles as cost Diamond top executives.

Oaktree also gets $10 warrants that if exercised would give the investment firm a 16% stake in Diamond. The deal also includes provisions that if Diamond hits certain earnings targets by 2013, the warrants would be cancelled and replaced with preferred stock with a 10% dividend for two years. Oaktree will also place two members on Oaktree’s board.

Diamond says in its release that it had discussions with “a number of top-tier investment firms” before reaching the deal with Oaktree.

Diamond shares gained 5.9% premarket to $24.51. They were down 28% this year through Tuesday.

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